I am conducting internal audit of manufacturing company, what are the areas of revenues leakeages in manufacturing industries. please help
2 Replies
CA. Ankit Bhansali
(---)
(120 Points)
Replied 04 February 2013
while auditing manufacturing units following thingd can be seen upon :
1) labour charges to ghost labour
2) purchase of consumables
3) labour & tools used for manufacturing goods or fixed assets- basically capitalisation is a problem.
4) petty cash is also of major concern.
Pawan Verma
(Assistant manager finance)
(186 Points)
Replied 12 February 2013
Hi Sourabh
Here are some regular possibilities of revenue leakage
1) Salary payments to fictitious employees
2) Purchases made without competetive quotations resulting in higher prices (Related parties)
3) Cash (Teeming and Lading) possible especially when both cashier and billing functions are done by the same person
4) Non Availment of tax benefits (Abatements/Exemptions)
5) Fictitious sales returns (Credit notes) raised although the customer has not returned any goods. Payment made against such amount can be siphoned off. Here Stock Physical verification remains critical
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